Indian auto stocks: HSBC flags selective buys in 2026

Why HSBC is turning constructive on autos

HSBC has argued that Indian auto stocks offer value for long-term investors, even after a volatile period for the sector. The brokerage noted that several auto names saw stock price declines in the 10% to 30% range, driven by concerns around commodity costs and global tensions. Against that backdrop, HSBC said the risk-reward is improving in select original equipment manufacturers (OEMs) and related plays where product cycles and operating execution remain supportive. Its focus list includes Maruti Suzuki, Hyundai Motor India, Mahindra and Mahindra (M&M), Tata Motors Commercial Vehicles (CV), Eicher Motors, and Ather Energy.

The call is also linked to policy-led demand support. HSBC expects recent GST revisions to lower vehicle prices, which it believes can lift demand across categories. That potential demand reset is a key part of its medium-to-long-term stance on the sector.

What changed: GST revisions and price cuts

HSBC said GST revisions should lead to increased auto demand as prices fall by 3% to 9% across categories. It expects a 200 to 300 basis points higher CAGR over the next four to five years across auto segments due to the demand boost from these GST-driven price cuts. The brokerage also said auto stocks have risen 6% to 17% since the GST revisions were announced on Aug. 15, indicating that markets quickly priced in part of the improved outlook.

On earnings, HSBC said it raised FY2027 and FY2028 earnings estimates by 4% to 14% across companies. For consumers, it highlighted that passenger vehicles could see price reductions of ₹40,000 to ₹1.5 lakh, with the highest reductions on vehicles priced around ₹10 lakh to ₹15 lakh. The combination of lower sticker prices and refreshed launch cycles is central to HSBC’s thesis.

HSBC’s selective ‘Buy’ list and targets

HSBC’s recommended list is not a broad-based call on every auto name. Instead, it is structured around company-specific strengths such as powertrain mix, upcoming launches, premium positioning, and operating efficiency. In Maruti Suzuki’s case, HSBC pointed to strong CNG offerings and an expected expansion in EV and hybrid launches.

For Hyundai Motor India and M&M, the brokerage maintained a positive stance through ‘Buy’ ratings and published targets (discussed below). On the commercial vehicle side, HSBC’s constructive view on Tata Motors CV is rooted in medium-to-long-term prospects supported by operating efficiency and strategic moves, including the Iveco acquisition mentioned in the brokerage’s rationale. In two-wheelers, Eicher’s Royal Enfield franchise and premium segment positioning remain a key support.

Company-specific drivers HSBC highlighted

Maruti Suzuki remains one of HSBC’s core ‘Buy’ calls, with a target price of ₹15,000. The brokerage attributed its view to Maruti’s strong position in CNG and the expected launch pipeline in EVs and hybrids, which can broaden the portfolio beyond traditional internal combustion offerings.

For M&M, HSBC retained a ‘Buy’ rating with a target of ₹3,900 in the auto-stock note. In a separate HSBC market strategy reference, M&M also appeared with a target of ₹4,000, where HSBC liked the company for earnings resilience and its long-term growth plan. That note said the automaker aims for 8x growth in its auto business between 2020 and 2030, translating to a 20% revenue CAGR in the next five years.

Eicher Motors received a ‘Buy’ rating and a target of ₹8,000. HSBC’s support for Eicher is linked to Royal Enfield’s performance in the premium motorcycle segment, including a 23% volume growth in FY26.

Ather Energy: EV retail expansion in focus

HSBC also highlighted Ather Energy with a ‘Buy’ rating and a target of ₹950. Its rationale cited Ather’s growing market share, which reached 18.7% by March 2026, along with rapid store expansion. The inclusion of Ather in the list shows HSBC is not limiting its view to incumbent OEMs, but also tracking EV players where distribution scale-up is visible in the data points it referenced.

How Nomura’s views compare on key names

Nomura separately identified M&M, Hyundai Motor India, and Maruti Suzuki as auto stocks to watch, anchored on SUV demand, festive season sales, and new launches. It raised M&M’s target price to ₹4,355, implying a potential upside of 22%, and cited strong SUV demand, new launches, and expected PLI approval for BEVs.

For Hyundai Motor India, Nomura maintained a ‘Buy’ rating with a target price of ₹2,833, implying an 18.3% upside. For Maruti Suzuki, Nomura assigned a ‘Neutral’ rating with a target price of ₹16,956, implying a 4.8% upside.

Snapshot table: ratings, targets, and cited triggers

Market impact: what the numbers imply

The GST-related pricing changes are the most immediate sector-wide catalyst cited by HSBC. Price declines of 3% to 9% across categories, and passenger vehicle reductions of ₹40,000 to ₹1.5 lakh, can influence showroom footfalls and conversion, particularly in the price bands HSBC flagged. The brokerage’s expectation of a 200 to 300 basis points higher CAGR over four to five years links these policy changes to longer-duration volume growth assumptions.

From a market perspective, HSBC’s observation that auto stocks rose 6% to 17% since Aug. 15 suggests investors have already reacted positively to the revisions. At the same time, HSBC’s decision to raise FY2027 and FY2028 earnings estimates by 4% to 14% indicates that the brokerage sees the policy change flowing through to profitability assumptions, not just near-term sentiment.

Broader brokerage activity: autos and ancillaries

Beyond OEMs, HSBC Global Investment Research also initiated coverage on Tenneco India with a ‘Buy’ rating and a target price of ₹700, implying an upside of nearly 35% from current levels, as per the source text. Separately, a set of five companies including Eicher Motors was described as having unanimous ‘Buy’ consensus from a combined 108 covering analysts, with upside to consensus target prices ranging from 4.5% to 24.5%. These references underscore that bullish positioning in autos is not limited to one brokerage, though the specific recommendations and ratings vary by firm and stock.

What investors may track next

For this set of calls, the next checkpoints are largely operational and policy-linked. Investors are likely to watch how quickly GST-driven price cuts translate into on-ground demand across passenger vehicles, CVs, and two-wheelers, and whether companies adjust discounting or mix accordingly. Company-specific factors also matter, including Maruti’s EV and hybrid launch cadence, M&M’s SUV trajectory and any update related to PLI approval for BEVs cited by Nomura, and Ather’s ability to sustain market share as store expansion continues.

Conclusion

HSBC’s long-haul view on Indian auto stocks is built on a mix of sector-level support from GST revisions and stock-specific catalysts such as product pipelines, premium positioning, and operating efficiency. While recent volatility led to 10% to 30% drawdowns in parts of the space, HSBC’s targets and estimate upgrades suggest it sees the demand and earnings setup improving. The most concrete near-term marker in the brokerage commentary is the post-Aug. 15 market reaction and how demand responds as price cuts filter through. Further updates are likely to hinge on quarterly performance, launch schedules, and any additional detail from brokerages on assumptions behind FY2027 and FY2028 estimates.